Action Plan for fair and simple taxation supporting the recovery
The Action Plan for fair and simple taxation supporting the recovery proposes to introduce a common, standardised EU-wide system for withholding tax relief at source.
Capital markets union 2020 action plan
Procedures for granting withholding tax refunds on cross-border investment are a major and long-standing barrier to the free movement of capital within the EU. In this context, the Capital markets union 2020 action plan aims to alleviate the tax burden in cross-border investment to foster capital markets integration.
JRC contribution to the FASTER initiative
The JRC actively contributed to the economic impact assessment of the FASTER initiative by analysing the effects of withholding taxes and relief procedures on cross-border investment and macro-economic aggregates using the general equilibrium model CORTAX.
Costs associated with withholding tax relief procedures
The JRC estimates the costs associated with withholding tax relief procedures to amount to EUR 6.62 billion per year. Lengthy and inefficient withholding tax relief procedures can give rise to direct financial costs, implicit financial losses (i.e. opportunity costs) and foregone tax relief.
Investor sensitivity to costs
Reinforcing these estimates, the empirical analysis carried out by the JRC shows that investors are highly sensitive to these costs.
Macroeconomic effects of eliminating costs
The JRC quantified the macroeconomic effects of eliminating the costs associated with inefficient withholding tax relief procedures. For that purpose, the JRC has used the CORTAX model, a Computable General Equilibrium (CGE) model designed to analyse corporate tax reforms in the EU27, UK, US and Japan. The original version of CORTAX was modified appropriately in order to accommodate the relevant policy parameters in the context of this exercise.
For more information on the initiative and the JRC contribution, please refer to the dedicated website of the FASTER initiative.
Team
Serena Fatica
Jon Pycroft
Andrzej Stasio
Daniel Stoehlker
SDGs, Targets, and Indicators
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 8: Decent Work and Economic Growth
- SDG 10: Reduced Inequalities
- SDG 17: Partnerships for the Goals
The issues highlighted in the article are related to taxation and cross-border investment, which have implications for economic growth, reducing inequalities, and promoting partnerships for achieving sustainable development goals.
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
- SDG 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average
- SDG 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources
The article mentions the need to alleviate the tax burden in cross-border investment to foster capital markets integration, which aligns with SDG 8.1. It also highlights the costs associated with withholding tax relief procedures, which can have implications for reducing inequalities (SDG 10.1). Additionally, the article emphasizes the need for partnerships and collaboration to address these issues, connecting to SDG 17.16.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- Indicator for SDG 8.1: Gross domestic product (GDP) growth rate
- Indicator for SDG 10.1: Income growth rate of the bottom 40 percent of the population
- Indicator for SDG 17.16: Number of multi-stakeholder partnerships for sustainable development
The article does not explicitly mention these indicators, but they can be used to measure progress towards the identified targets. Monitoring the GDP growth rate, income growth rate of the bottom 40 percent, and the number of multi-stakeholder partnerships can provide insights into the progress made in achieving the targets under SDGs 8, 10, and 17 respectively.
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth | Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries | Gross domestic product (GDP) growth rate |
| SDG 10: Reduced Inequalities | By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average | Income growth rate of the bottom 40 percent of the population |
| SDG 17: Partnerships for the Goals | Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources | Number of multi-stakeholder partnerships for sustainable development |
Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: joint-research-centre.ec.europa.eu
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